The US Dollar charts are certainly looking very interesting at the moment. It remains in a strong uptrend versus the Norwegian Kroner, Canadian, Australian & New Zealand Dollars, but over recent weeks has been losing ground against the Euro & Pound Sterling, and has lacked clear direction versus the Japanese Yen, Swiss Franc & Swedish Kroner (and also the USD Index). Was last Monday's slide against (in particular) the Euro, Japanese Yen, Swiss Franc & Swedish Kroner an indication of the start of a broader medium-term correction lower, or a one-off adjustment which has maybe presented US Dollar bulls with the opportunity to establish fresh longs at a cheaper entry point?

There are several technical factors which give credence to those holding the bullish view. For instance, last Monday's short sharp US Dollar dip against the EURO, Japanese Yen, Swedish Kroner & USD Index saw the rising 260 day (1 year) moving average either briefly broken or almost tested, before rebounding. What some might call a (bullish) failed downwards break. The concern though is that in all four cases the MACD indicator has taken a bearish turn, suggesting that the latest US Dollar bounce is at risk of leaving a lower top and being followed by another downside move. However, the bearish signals at this stage are not that strong and could be negated over the coming week or two if that subsequent dip can successfully establish a higher low above the recent sell-off low. In this case, the foundations may then be in place for a continued US Dollar recovery. The least likely of the US Dollar pairs to successfully do so is USD/JPY, where the recent slide appears to have completed a more significant reversal pattern, with the current bounce more likely to be a corrective move rather than the start of a new US Dollar uptrend.

Charts below - USD/EUR USD/JPY USD Index

As mentioned, the US Dollar remains strong against the commodity currencies (see below), which have unwound recent overbought conditions and look set to continue developing higher highs and higher lows.

Charts below - USD/CAD USD/AUD USD / NZD

The question is whether there will be a two-way spilt - continued US Dollar strength versus the commodity currencies but a period of further weakness versus several of the other majors, or whether the US Dollar will come back into a more broader period of strength, in which case it's recent losses were indeed a bullish failed downwards break. It's a close call and may take a week or two yet before the US Dollar outlook looks altogether much clearer.